Legalization of foreign cars: What Ukrainian protesters want?

Author : Lilia Brudnytska

Source :

Customs Code allows to import vehicles with foreign registration to the territory of Ukraine in the transit mode for 5-10 days. Protesters want to mitigate this rule. And MPs are ready to help them - it remains to convince the prime minister and president
23:42, 25 January 2017

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Ukrainian owners of cars with foreign registration today partially blocked the entrance to Kyiv, drawing attention to the bill №5567, the adoption of which would alleviate the conditions for the vehicles with foreign license plates in Ukraine. First, activists blocked Odesa, Zhytomir and Boryspil highways in the capital, and later moved to the Cabinet of Ministers.

This is not the first protest action of the owners of cars with foreign registration. Previous actions took place at border crossings, where car owners blocked the passage across the border. In Kyiv some protests were also held, but they were of a local nature. The current protest is the loudest of all. It is not excluded that the parliament will soon take up the matter, because the movement to legalize the foreign registration of cars in Ukraine has a lot of lobbyists among the deputies of the Verkhovna Rada. In particular, one of the ideologists of the legalization of these cars is the People's Deputy Volodymyr Parasyuk and his colleagues elected in the border areas. Among them - Baloga brothers, Dubnevych brothers, political faction of Oleh Lyashko and others.

What’s the problem?

All Ukrainians are familiar with car prices in showrooms and people who do not know, can just visit the website of any dealer. On July 6, 2012 was adopted the law according to which citizens became limited in the choice of the car - a gradual increase environmental standards was introduced. Since 2016 one can register in Ukraine only an imported vehicle of Euro-5 standard (this means maximum 2010 year of release). These vehicles, even used, are quite expensive. In the past year the real fight for the reduction of excise duties and taxes on used automobiles import started in Ukraine. Parliament reduced the excise tax for 2 years, but imposed a number of restrictions. Media wrote that opponents of easing conditions for the import of cars are the authorized distributors, as well as AvtoVAZ and Bogdan companies. They allegedly feared that the influx of European used car will hit the sales of their new cars.

However, after approving the law it became known that purchasing used cars in Europe, even with the reduced excise duty, is still expensive, and besides, it is inconvenient for the ordinary citizen according to the conditions. And many people started to purchase the cars with foreign registration. These cars are relatively cheaper; they didn’t pass custom at the border. The problem is that Customs Code allows importing such vehicles to the territory of Ukraine in transit mode for 5-10 days. In this case foreigners are allowed to drive foreign cars in Ukraine for 1 year.

Many people, especially those living in the border regions of Western Ukraine, buy cars with foreign registration and use them in spite of legislation. There even appeared some businessmen who register the cars on the foreign companies, which allow their owners to drive 1 year. In border villages Ukrainians cross the border every 5-10 days. However, it is inconvenient, is illegal and risky.

Thus was born a movement for the legalization of such cars. And in Ukraine, it found many supporters among the deputies. After several demonstrations and roadblocks at the end of December 2016 in the parliament emerged a bill authored by more than 70 deputies. Among the initiators of legalization are Parasyuk, Lyashko with his faction, Derevianko, Baloga, Dubnevych brothers, Tarasyuk, Chumak, Yurinets, Horvat, Musiy, Bereza, Lutsenko, Berezyuk and many others. There were the representatives of all factions, except the Opposition bloc. This is so-called compromise bill.

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Deputies noted that the facts of violation of the customs legislation regarding transit and re-export of vehicles for personal use are becoming more frequent. "Such actions of citizens are the result of tight fiscal and customs policy of Ukraine ... Citizens' right to choose a vehicle was severely restricted. Especially considering the fact that the majority of Ukrainian citizens are living below the poverty line and can’t buy a quality vehicle at a reasonable price, paying all taxes, " said in a memorandum.

At the present time, according to various estimates, Ukraine imported 1.48 million vehicles with foreign registration in different customs regimes. MPs recognize that the import of such cars by non-residents, or through the services of foreign legal entities or by residents in transit regime, leads to violations (because it is not just about commercial use, but private), and most of these cars are not monitored or controlled by law enforcement and the customs authorities of Ukraine. The continuous lawlessness in this field, which involves corruption at the border. And the state has no power to prohibit non-residents to import cars such, because it would be a violation of international norms.

What is offered by MPs?

So MPs propose to allow temporary import into Ukraine for cars and trucks weighing up to 3.5 tonnes and over the age of 7 years, as well as trailers for them, for a period of not more than one year. In this case, for each completed or partial calendar month of stay in the customs territory owner will have to pay part of the amount of customs duties for his vehicle. We are talking about the customs duty (up to 10% of the appraised value of the car), excise duty (calculated in euros, depending on the engine volume) and VAT (20% of a vehicle's value). In 2017, part of the amount of customs payments amounts to 0.2%, in 2018 - 0.3%, in 2019 - 0.5%.

This fee owner will need to pay at the time of passing through the border customs control zone. In the future, the term of temporary import can be extended for up to 60 days without crossing the state border. In the case of the sale of such vehicle on the territory of Ukraine he will have to pay a full-fledged "customs clearance".

It is proposed to import automobiles under the new scheme for private use only, and if you do this in order to conduct business activities, State Fiscal Service will have the right to prescribe a penalty of 34 thousand hryvnia. If you exceeded the agreed terms of temporary importation – you’ll receive penalties in the amount of cost of the car or its confiscation. Also there is a considerable clarification that the total amount of payments for cars with foreign registration must not exceed similar payments for cars manufactured in Ukraine.

What about results?

So, what gives us this bill. It partially legalizes imported/used vehicles, but at the same time strengthens the administrative responsibility for violations in this area by introducing heavy fines, including the confiscation of cars.

On the one hand, as mention the authors of the draft law, there is still an illegal import of vehicles with foreign registration. This is profitable for the corrupt officials, especially in customs. And is not possible to completely block the import of cars with foreign registration, therefore bringing the "black" import out to light adds revenue to the state budget, simplify people's lives, reduce queues and allow a wealthy Ukrainian citizens to get foreign cars. That, in principle, is better for the road safety than constant maintaining of the old car.

But opponents of the abolition of the current regime, among them members of the government, are appealing to weakness of this bill. In addition, there are concerns and that if the vehicle import rules are simplified, the cheap used cars from abroad will flow in the market, and this will crush the Ukrainian automotive industry and increase the accident rate on the roads of the country, not to mention the environmental degradation.

It would seem that such a temporary and fairly restrained format will suit both the government and car enthusiasts. However, on January 20 the bill was withdrawn from Parliament. It didn’t get to the committee for consideration. Today, protest initiators met with Prime Minister Groysman, who contributed to the adoption of the document. The organizer of the protest, Oleg Yaroshevych noted that such a meeting had been agreed earlier. It is possible that exactly in connection with this bill was withdrawn for revision, and it will be adopted later, but in a somewhat modified form. As we were told in the press service of one of the authors of the bill, it was withdrawn due to technical reasons.

It is noteworthy that sales of new cars in 2016, according to Ukravtoprom, increased by 40%, to 65.5 thousand units. At the same time, in 2013, in Ukraine 213 000 units were sold, which is 3.5 times more.

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